California may take gas-tax funds away from local governments

Imagine this if you can. California's pothole-lined, bumpy roadways are going to get a whole lot worse.

Gov. Arnold Schwarzenegger's latest proposal to trim the state's gaping $24 billion budget deficit calls for raiding gas tax funds from counties and cities this year and possibly for several more years. And the nonpartisan Legislative Analyst's Office agrees this may be a tactic the state has no choice but to pursue.

Up to $750 million could be diverted this summer and again in 2010, with no guarantee when the diversion would end. It's possible that three of every four dollars for local roads could be seized by the state.

For cities that rely heavily on state funds to repair their roads, the possibility is jarring.

"Devastating," said Carole Dawson, a civil engineer with the city of Seaside.

"This is crazy," said Mark Dettle, director of Santa Cruz's Department of Public Works.

"Catastrophic," said Chris Augenstein, a road planner with the Valley Transportation Authority.

California roads already rate as the most dilapidated in the nation, with more than two-thirds in poor to mediocre condition, according to a recent national report. The San Jose area has the second-worst roads in the nation, with 90 percent of its pavement rated poor to mediocre. Potholes in 11 California cities cost drivers more than $700 annually in car repairs, about $150 higher than the national average.

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Among the hardest-hit jurisdictions could be the roads division in Santa Clara County, which could see its funding drop from $23.8 million to $3 million — about 10 percent of what it has budgeted for road repairs for the next fiscal year.

"Cuts of the magnitude proposed," said Michael Murdter, director of the county Roads and Airports Department, "threaten the very existence of the department."

Added deputy director Dan Collen: "The proposals would so severely impact operating revenue that we may have to essentially suspend operations and respond only to emergency calls."

The cuts under consideration could delay plans to repave Monterey Highway and Story Road, or to add extra lanes to Highway 101 between Palo Alto and Mountain View, or to widen Interstate 880 from Milpitas to San Jose.

The cuts could also wipe out the benefit of stimulus funds the state has received. San Jose is getting $15.1 million in federal stimulus aid but could lose $23.4 million in state gas revenue.

The timing could not be worse. Construction firms are desperate for work, and bids for new projects are coming in 20 to 40 percent lower than estimated.

"This is the time to put public works projects out to bid, not the time to turn off the spigot," said Dennis Fay, director of the Alameda County Congestion Management Agency. "We are getting much more for the public's money from contractors now. We need to get more public works projects out to bid, not fewer. This proposal by the governor to divert local road gas taxes is penny-wise and pound-foolish."

If California wants to look to Washington for help, it may not find much. For the second time in a year, the national Highway Trust Fund is expected to run out of cash and may require an infusion of up to $7 billion to get through the year.

What alternatives do the governor and Legislature have? Not many, if they stick to their no-tax positions.

All options on the table are painful. Inmates may be released early from California prisons, state parks may be closed, the poor and elderly may lose health care benefits and programs for kids and schools are under siege. Some would say that cutting funds for road repair is bad, but other options are worse.

Transportation leaders almost all agree that it's time to raise the state's 18-cent-a-gallon gasoline tax, which hasn't increased since 1994.

"It's about time that we all start getting very serious about a gas-tax increase, indexing it to inflation and protecting those funds for transportation," said John Ristow of the Valley Transportation Authority, calling the current crisis "the most critical issue facing transportation in our history."

Santa Cruz's Dettle is even more direct.

"If the governor wanted to lead us out of this financial mess, he would raise the gas tax 10 cents a month for the next year," he said. "He could use this increase to pay down the budget deficit and for road repair. This would reinforce his talk about climate change and reducing our carbon footprint and encourage people to drive less."

That's a hard sell for voters, especially with the state unemployment rate in double digits. Few in the Legislature seem willing to go down that road.

But, says Bill Reichmuth, the deputy city manager in Monterey, a cutoff of gas-tax funds will have obvious repercussions:

"What the traveler will see is rather explosive growth in potholes, in size as well as numbers."